Brent crude dropped to its lowest since 2012 on Sept. 11.
This decline happened as the International Energy Agency slashed its global oil forecasts for 2014 and 2015, and the Energy Information Administration indicated that while U.S. crude stockpiles dwindled last week, this decrease fell short of expectations, Bloomberg reported.
Brent Prices Fall
October contracts for the raw material reached $96.72 a barrel on the London-based ICE Futures Europe exchange, their lowest since July 2, 2012, according to the news source. WTI scheduled for October delivery dropped to $90.43 a barrel in electronic trading on the New York Mercantile Exchange, the least since May 1, 2013.
Prices of different oil contracts followed each other lower in early trading, Reuters reported. However, they reached technical support levels later in the day, which allowed them to appreciate. In post-settlement trading, both brent and U.S. crude recovered, reaching $98.49 and $93.44 by 3:55 p.m. EDT (19:55 GMT).
“Oil prices continue their nosedive,” Commerzbank AG analyst Carsten Fritsch said in a report, according to Bloomberg. “OPEC already appears to be responding to the threat of oversupply. All the same, further cuts would need to be made by OPEC in order to balance the oil market.”
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Impact of IEA Report
Values for this commodity fluctuated after the IEA predicted that in 2015, global demand will rise 1.3 percent to 93.8 million barrels per day, according to Bloomberg. This figure represents a downward revision – of 165,000 barrels – from last month’s figure. In the second quarter, the growth in international consumption fell to its lowest in 2.5 years.
In its monthly report, the organization stated that demand for the raw material has suffered as inventories have expanded and economic growth has decelerated, Reuters reported.
“The recent slowdown in demand growth is nothing short of remarkable,” the IEA stated, according to the news source.
EIA Stockpiles drop modestly
During the week through Sept. 5, crude supplies fell 972,000 barrels to 358.6 million, Bloomberg reported. This figure was far lower than the 1.5 million barrel decline predicted by analysts participating in a Bloomberg survey.
This modest decline happened as the U.S. pumped 8.59 million barrels of oil a day, the highest rate since 1986, according to the news source. In comparison, the country generated 8.63 million barrels per day during the week ending Aug. 22.
Saudi Arabia developments
Another major development that potentially impacted supply-demand fundamentals was Saudi Arabia’s decision to slash its production of the raw material, which it did in reaction to falling oil prices, The Telegraph reported. The nation cut 400,000 barrels from its daily output in August, according to Organization of the Petroleum Exporting Countries.
The IEA provided different figures, stating that Saudi Arabia reduced its production by 330,000 barrels a day to 9.68 million in August, according to Bloomberg. Amid the latest changes to demand forecasts, OPEC predicted it will need to provide 29.2 million barrels of crude per day in 2015. This figure was 200,000 less than the group’s August forecast.
Global market participants interested in crude oil trading might benefit from knowing about brent’s recent drop to a 2.5 year low, as well as the developments that surrounded this decline.
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